Wednesday, 16 July 2008

The Future of Music Retail? It's not in payment models

Monday evening's MusicAlly debate was about the Future of Music Retail and, as ever with panel debates, i don't think we solved music retail's future. But to my mind one element of the debate was very telling in just how far away we are from knowing what the future holds for all of us in the music production and distribution business (and those of us consultants etc. 'picking over the bones of the music industry'). It's this: the constant pontification over payment models. MusicAlly's research presentation focused largely on the future of a la carte vs. subscription vs. advertising vs. free. Inevitably, much of the discussion that followed centred on these and on the impact of 'total music' solutions - either Nokia's Comes With Music or the pipe dream of music through ISPs - on the current iTunes-led digital business.

As a business we are collectively becoming dangerously fixated on payment models. I don't think the payment model is such a big deal. It's a boring debate. There are so many other ways to present a business model for digital music, starting with consumers needs and passions, few of which relate to payment (other than perhaps file-sharing).

By way of illustration, I love music magazines - i read them all pretty much. I subscribe to The Word and to Uncut. I buy Mojo every other month but don't want to subscribe. I buy Clash (i love the effort these guys are making) regularly, Classic Rock sometimes, all nicely a la carte. And i occasionally dabble with RockSound, Rolling Stone & others really just for curiosity. I will read Q, NME, Music Week & Billboard wherever i see them lying around in company receptions (i.e. for free). My music magazine consumption is a mixed economy basically. How i pay is up to me but i know i want to consume the product. For music i mostly buy CDs (just better all round than digital, sadly) but also the odd download and and i have in the past subscribed to Rhapsody (fabulous) and Napster (good). I do borrow & burn, i check out free MP3 blogs and streaming sites (I don't file share for obvious reasons).

How i chose to pay is as mixed a bag as the way i chose to listen (see later posts). What's consistent for me is the brands i choose to consume. And this for me is the key for music retail's future. In digital music, the biggest brand is Apple, a computer company. Though i want to pay due respect to Apple's contribution & committment to music - making a very complex thing look simple - i find it extraordinary that neither established retail music brands or editorial music brands have not achieved in this space so far. Step up HMV, step up Q (or any editorial brand that has extended into radio but so far ignored retail). And for the technology brands we have Nokia slowly grinding it out and maybe, just maybe breaking through with Comes With Music.

But here's the rub, Nokia's CWM won't make a big impact in itself. Not until it becomes a true music service with brand equity i.e. much more than an alternative payment model/music utility. Like editorial brands and traditional music brands and even iTunes (a bit), CWM and other new music services will need compelling music programming & features, genre expertise, mixed products and mixed payment models - presented in a cohesive, exciting way. I've got 100 views on the latter so i'll have to make it the subject of future posts.

As far as music retail goes, i did once have modest hopes for Starbucks and Calabash, largely for attempting to build brand equity innovatively in music and by working in high value niches. I now have great hopes for ShockHound, a new digital music brand soon to launch (now in beta) in the US. It's been created by Hot Topic, a wonderfully successful music merchandise brand that has focused on the 'emo kids' market - a high value music buying segment if ever there was one (kids under 24 who spend a fortune on music in all it's product forms including CDs). It doesn't look well executed from the beta site though, so my hopes are fading fast. Unless a bigger brand with a bigger platform wants to step in with some investment & get this great global music retail opportunity off the ground.

My point here is that if we can get beyond the payment model debate there are plenty of opportunities here for development, with high value music consumer segments just waiting to be served and waiting for a compelling set of reasons to pay not poach.

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